Dow rises in volatile trade ahead of next Fed rate hike

The Dow rose slightly on Monday in a volatile trading session ahead of the Federal Reserve’s two-day policy meeting that begins on Tuesday, where the central bank is expected to raise rates another 75 basis points.

The Dow Jones Industrial Average last traded up 45 points, or 0.13%. The index of 30 stocks oscillated on Monday between a loss of 263 points at its lows and a high of nearly 130 points. The S&P 500 and the Nasdaq Composite traded slightly higher.

Yields rose ahead of the Fed’s likely decision to raise its benchmark rate another 75 basis points to stifle inflation later this week, with the 10-year Treasury yield rising above 3.51% and hitting its all-time high. high level in 11 years.

After brief hope over the summer that the Fed might end its aggressive tightening campaign, investors sold stocks again, fearing the central bank might go too far and tip the economy into a tailspin. a recession.

Investors are focused on the Fed’s monetary policy meeting due to start on Tuesday, during which the central bank is expected to raise interest rates another 75 basis points. Investors are also looking for guidance on corporate earnings ahead of the start of the next reporting season in October.

“It’s been a very quiet session so far,” Vital Knowledge’s Adam Crisafulli wrote in a note to clients. “Stocks have climbed from their lows since earlier in the morning, but sentiment is still very gloomy. The consensus playbook for the week seems to be anticipating a brief rally around the FOMC, which most people expect to see. use it as an opportunity to post profits in preparation for further decline (a return to June lows is seen by many as inevitable).”

Six of the 11 major S&P 500 sectors rose or traded flat, led by consumer discretionary, industrials and materials. Financials also advanced, with some investors betting that higher rates could benefit their bottom line. Health care lagged, down 1.5%.

Stocks tumbled last week as investors reacted to a hotter-than-expected inflation report and a dismal warning from FedEx about a “significantly worsened” global economy. The major averages posted their fourth weekly loss in five weeks and hovered near two-month lows.

Beyond the Fed meeting, there are only a few economic data releases on deck this week, including August Housing Starts on Tuesday and First Jobless Claims on Thursday.

—CNBC’s Patti Domm contributed reporting.

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